LONDON BRIEFING: UK labour market tightens amid wage growth, vacancies

(Alliance News) - The UK jobs market has continued to improve, with no sign yet of a wave of ...

Alliance News 12 October, 2021 | 8:06AM
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(Alliance News) - The UK jobs market has continued to improve, with no sign yet of a wave of redundancies ahead of the closure of the government's furlough scheme, data released on Tuesday showed.

The UK unemployment rate eased in line with market expectations, standing at 4.5% in the three months to August versus 4.6% for July.

The number of payroll employees rose 207,000 to a record 29.2 million in September, returning to pre-pandemic levels.

The number of job vacancies in the three months to September hit a record high of 1.1 million, an increase of 318,000 from its pre-pandemic level.

Growth in average total pay - which includes bonuses - was 7.2%, and regular pay, which strips out bonuses, was 6.0% among employees for the three months to August.

Ahead of the wind-up of the government's pandemic job retention scheme on September 30, the redundancy rate remained around pre-virus levels.

"The jobs market has continued to recover from the effects of the coronavirus, with the number of employees on payroll in September now well exceeding pre-pandemic levels," said Darren Morgan, director of Economic Statistics at the ONS.

"Vacancies also reached a new one-month record in September, at nearly 1.2 million, with our latest estimates suggesting that all industries have at least as many jobs on offer now as before the onset of Covid-19."

Commented Paul Dales, chief UK economist for Capital Economics: "The further tightening in the labour market and rise in underlying wage growth in August increases the chances of the Bank of England raising interest rates in the coming months despite other evidence that the economic recovery is spluttering."

Dales added: "The further rise in vacant positions to a new record high of 1.102 million suggests that demand for workers remains strong. But crucially evidence from other surveys suggests that vacancies are high partly because employers are finding it increasingly hard to find workers. So there's no real signs in this release that the labour shortages have started to ease."

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: down 0.4% at 7,070.20

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Hang Seng: down 1.7% at 24,900.93

Nikkei 225: closed down 0.9% at 28,230.61

DJIA: closed down 250.19 points, or 0.7%, at 34,496.06

S&P 500: closed down 30.15 points, or 0.7%, at 4,361.19

Nasdaq Composite: closed down 93.34 points, or 0.6%, at 14,486.20

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EUR: flat at USD1.1567 (USD1.1570)

GBP: down at USD1.3603 (USD1.3625)

USD: down at JPY113.09 (JPY113.28)

Gold: up at USD1,760.99 per ounce (USD1,758.25)

Oil (Brent): up at USD83.87 a barrel (USD83.77)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Tuesday's Key Economic Events still to come

IMF world economic outlook published

1100 CEST Germany ZEW indicator of economic sentiment

1000 EDT US job openings

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UK Brexit minister David Frost is to set out Britain's demands for changes to the Northern Ireland Protocol amid a stand-off with the EU over the role of the European Court of Justice. In a speech to the diplomatic community in Lisbon on Tuesday, Frost will warn the protocol cannot survive without fundamental reform to governance arrangements. But even before he delivered his address, he was accused by the Irish government of creating a "red line" barrier to progress in resolving the dispute over post-Brexit trading arrangements. Irish Foreign Minister Simon Coveney said the peer was setting demands he knew the EU could not move on and questioned whether the UK really wanted to agree a way forward.

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The Irish government will unveil its budget for 2022 later Tuesday, in a package that will amount to EUR4.7 billion. Following last-minute discussions among some departments and officials, the details of the budget were rubber-stamped and will be set out on Tuesday afternoon. Minister for Finance Paschal Donohoe and Minister for Public Expenditure Michael McGrath will deliver their speeches in the Dail chamber at 1pm. It marks a step on the road to recovery from the pandemic after last year's budget was made in the Convention Centre. Another indication of the Dublin government's plan to emerge from the Covid crisis is the winding down of emergency spending that propped up the country throughout the pandemic.

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Producer prices grew in Japan in September compared to the month before and on an annual basis, preliminary data from the Bank of Japan showed. Producer prices were 0.3% higher in September when compared to August, after staying flat in August from July. Annually, prices grew 6.3% in September, compared to a 5.5% increase in August and 5.6% growth in July.

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BROKER RATING CHANGES

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BARCLAYS CUTS AVAST TO 'EQUAL WEIGHT' ('OVERWEIGHT') - TARGET 565 PENCE

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BARCLAYS RAISES ALFA FINANCIAL SOFTWARE TO 'OVERWEIGHT' ('EQUAL-WEIGHT') TARGET 205 (170) PENCE

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BERENBERG INITIATES WEIR GROUP WITH 'BUY' - TARGET 2060 PENCE

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COMPANIES - FTSE 100

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Entain backed full-year guidance following a "strong" third quarter. Net gaming revenue in the third quarter of 2021 was up 4% on a year ago, with online growth of 7% but retail revenue slipping 1%. On a constant currency basis, online growth was 10% and retail registered a 1% rise, resulting in total net gaming revenue growth of 6% for the quarter. The sports-betting and gaming firm continued to expect 2021 earnings before interest, tax, depreciation and amortisation in line with previous guidance of GBP850 million to GBP900 million. "These results demonstrate Entain's continuing ability to deliver sustainable, consistent and diversified growth. Our powerful Entain platform provides customers with great products and experiences, which enables us to grow ahead of our markets as demonstrated by 23 consecutive quarters of double-digit online growth," said Chief Executive Jette Nygaard-Andersen.

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COMPANIES - FTSE 250

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Budget airline easyJet said it managed to trim losses in its fourth quarter, leading to a better-than-expected full-year result. It now expects a headline pretax loss for the financial year that ended September 30 of around GBP1.14 billion to GBP1.18 billion, compared to consensus of a GBP1.18 billion loss. The short-haul carrier flew 17.3 million seats in its fourth quarter, operating 58% of pre-pandemic capacity after flying just 17% of 2019 volumes in the third quarter - and positively, it expects this to improve further to 70% in the first quarter of the new financial year. "While intra-European demand led the recovery over the summer, the recent UK government announcement to remove and relax restrictions and testing has created positive booking momentum into Q1," said easyJet. The airline expects capacity to continue to grow through the 2022 financial year.

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Stagecoach said it remains in merger talks with National Express as it reported a recovery in regional bus demand. The public transport operator said regional bus journey numbers were in excess of pre-virus levels by the end of September. Meanwhile, Stagecoach is "pleased with the continued strong operational and financial performance" of its London bus business. "The momentum in passenger journeys and sales reflects a pick up in activity and travel across the UK, and growing confidence to return to public transport. While there remains some uncertainty around how the recovery continues, our outlook for the year ending 30 April 2022 is unchanged from when we announced our full year results in June 2021," said Chief Executive Martin Griffiths. Stagecoach added that talks with National Express over a potential all-share merger remain ongoing, with due diligence taking place, but warned there was not certainty a deal will be done.

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COMPANIES - MAIN MARKET AND AIM

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Marley Group, a Burton Upon Trent-based pitched roofing business, has postponed its IPO on the London Main Market, having confirmed the plan only late last month, saying it hoped to raise GBP75 million. Marley on Tuesday cited "market volatility" for the decision, which it said was made despite "considerable institutional investor interest", saying going ahead with the IPO "is not in the best interests of the group and its stakeholders".

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Tuesday's Shareholder Meetings

Augean PLC - GM re acquisition by Eleia

City of London Group PLC - AGM

Clipper Logistics PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Avast PLC 565.00 GBX 0.86 -
Alfa Financial Software Holdings PLC 169.50 GBX 0.59 -
Weir Group PLC 1,661.50 GBX -1.04 -

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